Behind the ‘Buffalo Billion,’ a Bid-Rigging Scheme Emerges
Posted June 19, 2018 12:00 a.m. EDT
NEW YORK — In his years in public education, Alain E. Kaloyeros was one of New York’s biggest success stories, parlaying his expertise in nanotechnology to become one of the state’s most powerful and highest-paid employees.
As the former president of New York Polytechnic Institute, Kaloyeros became the unlikely architect of many of Gov. Andrew M. Cuomo’s economic development efforts in the state, including the governor’s marquee project, the so-called Buffalo Billion.
But on Monday, Kaloyeros found himself in another unlikely scenario: standing trial in U.S. District Court in Manhattan, accused of manipulating a bidding process to steer lucrative state contracts to two developers whose executives had made large donations to the governor’s election campaigns.
“Those contracts were supposed to go to the winners of a fair and open competition, but that didn’t happen,” David Zhou, a prosecutor, said in his opening statement. That did not happen, he added, because Kaloyeros “made sure that the fix was in.”
The trial of Kaloyeros, 62, focuses on allegations of wrongdoing in Cuomo’s programs to revitalize upstate and western New York. Prosecutors have said that Kaloyeros, as head of SUNY Polytechnic, developed partnerships with private companies to create large development and construction projects.
But the government has said that Kaloyeros, working with Todd R. Howe, a consultant, tailored requests for proposals, known as RFPs, to ensure that Fort Schuyler Management Corp., a nonprofit real estate arm of SUNY Polytechnic, would inevitably select the two firms, COR Development in Syracuse and LPCiminelli in Buffalo.
Both COR and LPCiminelli were clients of Howe, a former lobbyist and Albany insider who had been close to the former Gov. Mario M. Cuomo, and had worked for Andrew Cuomo when he was secretary of the Department of Housing and Urban Development in the Clinton administration.
In one case, COR executives got a copy of the Syracuse RFP before it was released to the public or competing firms, Zhou, the prosecutor said.
The government has also said that a COR executive, Steven Aiello, emailed Howe with the company’s qualifications and experience. “Some of those exact qualifications ended up” in the RFP, “word for word,” Zhou told the jury.
Ultimately, more than $100 million in state contracts was awarded to COR and more than $500 million in contracts to LPCiminelli, Zhou said. Aiello and Joseph Gerardi of COR and Louis Ciminelli of LPCiminelli are co-defendants of Kaloyeros.
Prosecutors have not accused Cuomo, a Democrat, of any wrongdoing, and after Kaloyeros and others were charged, Cuomo said he had “zero tolerance for abuse of the public trust from anyone.”
Zhou told the jury that Kaloyeros originally had a “rocky relationship” with the governor’s office and worried about job security, but that changed after he hired Howe. “Howe was the key to the governor’s office,” Zhou said.
Andrew Kennedy, a former deputy director for state operations under Andrew Cuomo, testified on Monday that he had known Howe was friendly with the Cuomo administration, and that “projects he was advancing got consideration.”
In the defense’s opening statements, lawyers sharply rejected the prosecution’s depiction of their clients.
One of Kaloyeros’ lawyers, Reid Weingarten, said there was no credible evidence that the RFPs were secretly tailored to favor the two firms, and that an “independent evaluation” eventually occurred in each case.
“What motivated him from start to finish was the desire to honor Andrew Cuomo’s request, to spread the miracle, bring high-tech jobs all over upstate New York,” he said. “That’s what he endeavored to do.”
He also disputed the prosecution’s suggestion that Kaloyeros brought in Howe to win support from the Cuomo administration.
“He was a hero in Albany,” Weingarten said of Kaloyeros, adding that Cuomo’s administration was more concerned that Kaloyeros would be “recruited away” than it was thinking about firing him.
Ciminelli’s lawyer, Paul Shechtman, said his client’s firm had been chosen “on the merits,” and that his client did not “try to shape” the Buffalo RFP.
Milton L. Williams Jr., who represents Gerardi, called Howe a “master manipulator.”
Howe is the trial’s missing witness. He had been the star prosecution witness in a previous corruption trial that involved Joseph Percoco, a former top aide to Cuomo who was convicted in March.
But Howe was arrested during that trial after admitting on the witness stand that after signing a cooperation agreement with the government, he had tried to defraud a credit card company, a crime he had not disclosed to prosecutors.
Prosecutors are expected to introduce Howe’s emails as evidence against Kaloyeros and his co-defendants, but they said last month that they would not call the disgraced witness to testify.
Aiello’s lawyer, Stephen R. Coffey, made sure to remind the jury of Howe’s absence. “Todd Howe is not dead,” he said.